WHY SO MANY SELF STORAGE FACILITIES??

By now, nearly everyone has noticed an inordinate number of Self Storage Facilities being built in their hometown.Over the years I have been asked many times what is driving the demand for so many storage facilities? We currently own and manage two here in Bend Oregon; A-Plus Mini Storage and Powers Road Self Storage. While most people are merely asking this question rhetorically, I find myself launching into very long winded dissertations of all of current political and socio-economical influences that are driving this trend. But to fully understand this phenomenon I believe we also have to analyze this from a historical perspective as well.

STATISTICS

In 2014 the Self Storage Association (SSA) estimated that there were over 60,000 “self service” style storage facilities in the world. But more interesting is that 48,500 are in the US, and the other 12,000 are shared by the rest of the world. So this phenomenon is predominantly confined to the United States.

I now believe that the huge demand for storage of personal property is a reflection of the cumulative effect of the cultural changes over the past 50 years, and globalization over the past 20 years. I will leave it to the reader to decide which factors they believe played the biggest role.

IN THE BEGINNING

According to articles published by the SSA, the very first self storage facilities in the US began to pop up in Texas, Florida, and the west coast in the late 60’s. In an article posted on the SSA Blog, Ron Havner, CEO of Public Storage attributed the need for storage to the Four D’s: “Death, Divorce, Disaster, and Dislocation”. But this does not explain why the US has the lion’s share of the world’s facilities considering that the “Four D’s” are not confined to the US, and especially considering our population is only 4.4% of the world (according to the Census Bureau).

TOO MUCH STUFF

This is the obvious one, but it is not the whole story. Admittedly we are a “Consumer Driven Economy”. From birth we bombarded with advertisements, cleverly designed by the world’s top neuroscientists and psychologists, that train our minds to believe that the more material wealth and possessions we have, the more happy and fulfilled we will be. This too is not limited to the United States. But it is fair to suggest that people in the US have a bit more discretionary income to frivolously spend. And the costs of our imported goods are relatively cheaper in the US, because they are not tariffed as they are in nearly every other country.

Historically, many families were used to living in small houses. But they had a lot less stuff, because material goods used to be quite expensive. In the 70’s I can remember paying $34 for a pair of Levi Jeans at the Gap, and a Shimano fishing reel was $28 at Kmart. My first 10 speed bike cost $190 at the Sewickley Bike Shop. Considering that minimum wage in the early 70’s was $1.60, these were very large investments. Needless to say, families had little need to store excessive amounts of goods through those years.

So what happened? Well, a few things: In 1970 President Richard Nixon formed the EPA. By 1974 the demise of the auto, steel, and manufacturing industry was in full swing within the region now known as the “Rust Belt”. In 1971 Nixon opened trade relations with The People’s Republic of China. At the same time Nixon “temporarily” took the US Dollar off of the Gold Standard, but never returned it back. By 1973 the US dollar was (de facto) a “Fiat” currency as is now most of the world. The complexities of how this is related to the financial crisis of 2008 goes far beyond this depth of this article, but let’s just say this was a large staple in the diet of the “Derivatives Beast”. BTW: How many of you know what a “Derivative” is??? Well, the “Derivative Beast” is alive and well today. He is lying dormant for now, and can awaken at any time.

The Globalisation era really accelerated in the mid 90’s. In 1994 President Clinton established NAFTA, the Internet became available to the public, and Amazon and Ebay were born. We also saw many jobs being outsourced to India, Indonesia, Malaysia, Thailand, and The Philippines. But the final blow happened in 2001 when China entered the World Trade Organisation, and we witnessed the exodus of the remaining manufacturing plants in the US. We now import $648 billion dollars of goods from China alone. And, globally, we have a $500 billion trade deficit. Because of currency manipulation within exporting countries, these imported goods are (inflation adjusted) cheaper than they have ever been. This allows people to purchase boat loads of cheap goods, far beyond their needs. Eventually the surplus of goods will end up in our landfills, but they often have a lengthy layover in a storage locker.

HOUSING BUBBLES

The dying industries of the northeast lead to mass migrations to the rest of the country. The early 80’s began a time of great suburban sprawl in nearly every area of the nation except the northeast, and the midwest. This has caused a series of housing booms over the last 40 years. The construction of the boomtowns of the 80’s, 90’s and 2000’s created thousands of new jobs. The problem was that most of these jobs were somehow “Construction Related”. This would effectively “Fan the flames” of a false economy and create Boom/Bust cycles that we have grown all too familiar with. The worst of this came from the frivalus lending of the early 2000’s, and the fraudulent activities of the Securities/Investment banking sector. This all lead to the so called “Derivatives Beast” and the Financial Crisis of 2008. Each boom/bust cycle causes massive “dislocation” (one of the “4 D’s”) and has developed a very Transient Culture (as I will discuss below).

TRANSIENT CULTURE and LOW RATE of HOME OWNERSHIP

At present it is very difficult for an intact family with two working parents to afford to buy a suitable home. Suffice it to say it’s nearly impossible for a single parent. According to the National Association of Realtors (NAR) home ownership is at 63%, which is the lowest it has been since 1967. Rents are quite high, as well. According to Zillow the median home rental hit a new high in November 2017 of $1599/mo. Consequently, the trend for many families is to live in smaller homes and use self storage as a more permanent means to handle the overflow.

Renters tend to get displaced unexpectedly from their homes. After the 2008 mortgage crisis, many homeowners opted to rent out their homes rather than attempting to sell them in a very weak market. Now that sale prices are up, many rental properties are being sold, and many renters are being displaced. Most tenants are only given a 30 to 60 day notice to vacate. In a tight rental market renters find themselves in temporary housing until a more suitable rental comes available.

People today are also far less loyal to their jobs. Very few people envision themselves staying with their employer until they retire. In 2015 a study released by the Bureau of Labor Statistics projected that the average person will have 12-15 different jobs in their lifetime.

Also, you might say there is a “Voluntary” form of transience today. And it is not necessarily a bad thing. The world is a smaller place. The internet, cell phones, emails, and texts now allow the young and old to relocate to regions far away, without feeling disconnected from the ones they love.

So, unless you can still fit all of your belongings in your hatchback, you will likely take advantage of a storage locker during these transitions in your life.

REVISED AMERICAN DREAM

Another big trend we are seeing around the country is the push to end Horizontal Suburban Sprawl, and revive the more densely populated Urban areas. In an effort to reduce our “Carbon Footprint” city planning departments are now embracing vertical development (multi-story) “Mixed Use Zoning” to enable a ”Walkable Urban Development”. This is actually a very old idea, and how most cities were originally developed prior to the automobile. New buzz words like; Uber Cabs, Semi-Dockless Bike Shares, Microtransit, and Last Mile Gap all reflect the ongoing effort to reduce the need of using (or even owning) an automobile. So with this new style of living the two car garage of yesteryear is replaced with a parking garage, and the backyard is now a small balcony. Basements and attics were already a thing of the past even in most newer housing designs. All of this points to a permanent need for secondary storage facilities for both the residential and commercial occupants of the mixed use developments. In most major cities you will now find multi-story self storage facilities located within the heavily urbanised areas.

SLOW DEATH OF THE TRADITIONAL FAMILY

I believe the cultural revolution of the 60’s played a large role in the divorce rate doubling through the 70’s (from 22% to 52% ish) where it still remains today. However, in addition to this, in the mid 90’s we began to see the emergence of the “Single Mom”. A “single mom” is one who has her child (or children) out of wedlock, as opposed to giving birth and then getting divorced. So add that on top of the 50% divorce rate. According to “Child Trends, Births to Unmarried Women”, 4 out of 10 children in the US are now born to unwed mothers. “Traditional Families” had a high rate of home ownership, and used to have the ability to up-size their homes as their families grew. Nowadays, many young mothers will either live in a small apartment, or move back in with their parents. Either way, a storage unit can be quite handy when living space is at a premium.

RIGHT WRONG or OTHERWISE

More and more Americans are finding the benefits of renting a storage unit. All across the country new self storage facilities are being built to satisfy this need. For most people, renting a storage unit will be confined to the more tumultuous periods of their lives. But for others it will serve the permanent needs created by a new way of life. Changes in politics, and a major shift in socio-economical traditions over the past 50 years are continuing to drive this trend. This is all an integral part of our new world, and is not likely to change anytime soon.